A report of the ‘China 2013 – what next?’ CJA UK seminar held at Senate House, University of London, on 22nd January 2013
By Anuj Kapoor, CJA UK
Enigmatic doesn’t begin to describe what China has come to mean to the world in recent decades. Even as a bit more is known and understood about Chinese systems and practices, there continues to be considerable speculation on what the country’s next steps might be or what China’s intentions are especially vis-à-vis its neighbours and the west.
Making sense of these issues is hard. Attitudes about Chinese policies vary and continuously evolve. China’s relations with its neighbours in Asia are complex and periodic skirmishes break out resulting from territorial disputes and unresolved issues from history. All these are themes that reflect themselves in various forums across the world.
From climate change negotiations to currency markets and trade wars, there are several potential flash points and issues that affect us all. At the same time China has had enormous success in lifting millions out of poverty in a relatively short period of time, its manufacturing has revolutionized industries, enhanced profitability and at times buoyed the global economy.
Most idea sharing platforms, think tanks and academics have reflected on what China’s rise might mean for the world. Such active discussion and analysis has both helped interpret what is perhaps one of the most important if not the most important development of the 21st century and also shed light into what is a very closed and fiercely secretive administration.
Therefore the decision to host a seminar on China in 2013 by the Commonwealth Journalists Association was both topical and enormously engaging. An interesting Munk debate in Canada between Henry Kissinger, Nial Ferguson, Farid Zakaria and David Dakou Li about a year ago on whether the 21st century would belong to China had concluded that a multi-polar world was emerging which would ensure that no one country could dictate the running of global affairs. China would be a significant force in that world, but not the only power, that a peaceful and symbiotic relationship between China and the US and between China and other regional powers was needed.
The CJA seminar dug deeper into these issues looking at some specific flashpoints and issues that will in all probability dictate the future course of China and in some measure of the world in the years to come. Analysing the country’s progress, potential threats and opportunities as well as suggesting a course of action, the discussion was truly informative and deep. A quick summary of what was discussed and what ideas brought to attention is given in the passage below.
Humphrey Hawksley, a leading BBC foreign correspondent, author and commentator on world affairs chaired the discussion. Laying out a quick historic context, he pointed towards centuries of Chinese leadership in the world across the arts and sciences, until the 19th and early 20th centuries when civil unrest, famines, war losses and foreign occupation depleted China’s stature and economy. He recounted how after World War 2, Mao established a strict communist system that protected Chinese sovereignty but at huge cost in lives and freedoms within the country.
A market-oriented policy framework starting in 1978 helped quadruple the economy and in the 1990s China increased its global reach and participation in international forums. Bringing the conversation to present day China where 1.343 billion people live as per numbers published in July 2012, Mr. Hawksley shed some light on the demographics of a population that is 47% urban has a life expectancy at birth estimated at 74.84 years and a GDP per Capita of 8400 USD. With this introduction from Mr. Hawksley, the conversation was taken over by the panel.
Jonathan Fenby, writer and China specialist delivered what he called “The Overture, with the concert to follow”. He argued that looking back 35 years the economic reform from the end 70s introduced by Deng Xiaoping following Mao’s death was essentially based on a political calculation.
Mr Fenby described Deng as a nationalist and out and out communist since his early years. He said Deng wanted to rebuild China as a global power, regaining the stature it had in the 18th century using the communist party as the vehicle to do so. Looking at Chinese strengths weaknesses, opportunities and threats, he pointed out that national unity was achieved through military force removing any intermediary voices in the form of civil society that could challenge the party’s power.
But with 150,000 protests every year, instability in Tibet, Xinjiang etc, the country’s growth though rapid had exacerbated some problems, he said. Inequality between the rich provinces near the coast and the poorer provinces inland, corruption, environmental crisis and social evolution that was leading to the urban middle class getting out of control were the threats he recounted in his assessment.
Citing the GINI Index, which measures economic disparity, he said the index showed far higher inequality in China than in western countries. This to him is a key challenge facing the country with a Leninist system where the party is more important than the state government. He also mentioned implementation of policies as a big challenge in the country. There are for instance strong environmental protection laws and anti-corruption policies that are just not implemented. Finishing with the social evolution argument, he said the party faced a problem in a context where, “people have enough to eat and time to think.”
Carrie Gracie BBC correspondent and former China reporter who did the BBC Four series ‘China as History is my Witness’, followed. She spoke about the role of Media in China and what 2013 looked like from the point of view of journalists. She said the communist party views media as an extremely potent tool and considers party strengthening to be the media’s role. Describing the transition period in China from the old administration to the new as tense and ‘febrile’ she emphasized the need to understand what direction the people were trying to push the country in and what the forces were that were acting on the media.
Ms Gracie said the middle of a transition in China has always been tricky even in pervious dynasties, but especially so in this current social evolution context. She claimed that the tense situation meant that the new leaders wanted to send no signals or make any false moves. She described Xi Jinping’s strategy as wanting to lay low. However some actors within the society were according to her forcing the administration to show its hand.
Anecdotally Ms Gracie mentioned a recent Editorial titled ‘Dream of Constitutionalism’ in The Southern Weekly, a liberal leaning political journal. The editorial on Political reform was simply about building a system that protects the rights of citizens, implying limiting the power of the state. She described how the central propaganda authority got involved censoring the editorial. All these to her were examples of the struggle between the new leaders and actors in society trying to express themselves.
She claimed that censorship of media seems to have worsened. In the run up to 2008 some elements of media seemed to be easing but that trend seems to have reversed. Perhaps in the wake of the Arab spring, the Govt may have grown paranoid about a similar thing happening in China. She said China was very low on press freedoms index with some of the highest numbers of bloggers and writers in prison ahead only of Iran and Syria. However she cited rising Internet penetration with more than half a billion people on the net as a sign of an irreversible phenomenon. On the web, she claimed people are undermining government and exposing hypocrisy at provincial level, county level and the like.
There are attempts to block searches and limit this freedom, but one cant be sure how successful these will be. Such a top down dictating of the media etc. is resulting in new alliances emerging. Film Actors for instance are coming out and speaking about press freedoms now. So to the question that ‘Is media progressing freedoms or the party?’ the answer is not very clear. But she said she believed that this genie can’t now be put Back in the bottle.
Rana Mitter, Professor of History and Politics of Modern China, Oxford University and author of the book ‘Modern China a Very Short Introduction’, spoke about Chinese nationalism. He stated at the outset that despite the issues he was going to raise about tensions and conflicts with neighbours, China was a very long way from the situation 70 years ago when East Asia erupted.
Professor Mitter spoke about Chinese relations with the neighbours and the question of nationalism which links to dangerous instabilities in the region. Mr Mitter said that till a year ago, China seemed to be doing a good job managing fraught relations with neighbours, ensuring that each conflict erupted one at a time.
In the last 6 months however there was a fundamental change in its relations with powers in the region both Japan and the powers in the South-China sea such as Vietnam and the Philippines. He said there were two reasons for this. The first immediate reason being the turbulence caused by the leadership crisis such as the Bo Xilai affair before the transition. Even though these are domestic issues they reveal fissures that have led to more conservative nationalist line up at the top. The other reason he described as being contextual. He cited a lack of proper multi lateral, multi national organisations in the Asia pacific region as a vital missing block.
Professor Mitter contrasted this with the North Atlantic region where associations such as NATO and EU can be seen as successful transnational organizations that service a wider need for regional stability beyond the nation state. He said that a reading of the History of Asia post 1945 would reveal why such associations were not formed in Asia, but the fact is that there are still conflicts across various seas in Asia resulting form past unresolved issues and disputes which need to be managed.
None of the organizations such as APEC, ASEAN Plus 3, create a multilateral environment within which China can operate. According to Mr Mitter, it is in China’s own interest to find a way to embed itself in such multi-lateral organisations. To create suasion instead of force to manage conflicts. He said the question of internal stability was another issue that had international implications.
Stability within China remains a cause for concern. Issues such as rising middle class, property prices, healthcare, managing urban laborer migrants and examining whether the current social contract in the five-year plan will succeed are stresses that need attention. China needs to focus on stabilizing the internal situation so the tension outside is not helpful.
With respect to India he said it was not important to see who would win the race between the two countries for growth and power, but that China was way ahead of India as was reflected in GDP numbers, (China’s USD 8400 per capita to India’s USD 3500) which showed that China had resources like never before to manage the crisis surrounding it. When asked a question about a shift of US strategic focus to Asia pacific, he said China’s policies have made US more popular than it had been.
Obama, post-Bush, has pivoted towards Asia, which has helped American relations in the region. He said the US has many countries who would want to keep its influence in Asia longer. China’s friends on the other hand like Pakistan and Cambodia are not necessarily the greatest partners.
Stephen Chan, Professor of International Relations, SOAS, University of London introduced himself as more African than Chinese given his work as Advisor to African trade delegations going to China. So he introduced himself to the audience as a sort of Chinese person who has much more roots in Africa than China.
Professor Chan spoke on China’s strategy and experience in Africa. He said that China’s reach in Africa was not as much as we might feel. Unlike what people might think, China is not present in many parts of the continent. Also, China according to him doesn’t really know exactly what they are doing in Africa and he feels that if their policies elsewhere in the world are similar to what they have had in Africa, it should be a cause for concern.
He cited feeds coming from Chinese embassies to Beijing as carrying information that seemed to be wrong. He called the kind of risks China seemed willing to take based on this information an ‘outrageous punt’ but it’s a game they seem to be willing to play. He said that China was not in Africa for the oil or resources and that the competition in Africa was in the future. China was investing in Africa for the long haul, when US runs out of Middle Eastern oil in 20-30 years. He called China’s Africa strategy a long game with huge risk based on little knowledge.
Professor Chan said the gains the Chinese hoped to make are upstream, and there are no guarantees that political crisis in Africa wont impact the potential pay off for China. Quantities expected by the Chinese may also be actually much less in reality. Like in the past when they invested about USD 100 Mio per country during the cold war for no return to form political alliances that didn’t work out. He also mentioned the changing attitudes to China in Africa resulting from migration of Chinese businessmen to the continent.
This was leading to reputational loss to China because of private enterprise of the Chinese which used at times short cuts and operated sometimes in a racist manner. This could be damaging as no standards of conduct seemed to have been cultivated in this new generation of Chinese in Africa, which could build antipathy and affect voting behavior, that would in effect jeopardize access to the upstream resources in the future. He said the issue in China was of relative interests vis a vis the west and not Chinese absolute interests.
George Magnus, Senior Economic Adviser, UBS Investment Bank, and author of ‘Uprising: Will Emerging Markets Shape or Shake the World’s Economy?’ was the last of the speakers. He spoke about the Chinese economy and the challenges facing it. He said Chinese economy is particularly important now as it has reached the end of extrapolation. He said China faces issues of discontinuity, making it hard to predict its growth into the future in a linear fashion. The GDP rate, which hovered around 10% through the 2000s was now dropping to about 5%.
Mr Magnus mentioned challenges to Chinese growth in the form a climaxing demographic dividend, rising environment cost (10% of GDP as per some recent estimates) and increasing pressure on public spending. He explained the Demographic impact as old age people versus younger generation has turned negative with the proportion expected to rise from 11% to 18% by the end of this decade and up almost to 40% by 2030.
Demographic dividend has been banked totally which means that Labour force participation is declining, savings will fall and the era of cheap labour is over. The other challenge he mentioned was of rising social spending as a result of increasing proportions of older people. Public social spending he said is at 7%, much less than a third of OECD, less than half of Brazil, Russia, etc, and is set to rise. China would have to find a way to fund this. Also, cyclical changes will result in slowing of the economy.
The challenge, according to Mr Magnus, is how do you compensate the Labour contribution to growth, which has extinguished. He said the country needs to rebalance towards technology, innovation, small businesses and reform its education system. In terms of its evolution as an economy, Mr Magnus said that China was a middle-income country and heading toward becoming a upper middle income economy where there are risks of getting stuck in the middle income trap. There is therefore a need to reboot the economy. Such a reboot needs a lot of inputs, like education, investment etc. and a whole range of reforms that may conflict with the primacy of the party. So according to him, the jury is still out on how China will deal with these issues.
The bottom line of the discussion whether viewed form a social point of view or from an economic perspective was that a new model needed to be invented in China to keep the country’s growth on track, maintain workable and sustainable relations with neighbours and maintaining internal stability.
Posted by Will Henley
Image: © Debbie Ransome